Assistance for Areas with High Electricity Distribution Charge (AAHEDC) costs explained
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The information in this video and article was accurate as of 1 April 2025. We update our TPCs Explained hub every Spring to reflect any changes.
What’s the Assistance for Areas with High Electricity Distribution Charge (AAHEDC)?
The AAHEDC provides support in areas with very high distribution costs relative to other regions. Currently, the north of Scotland is the only region that receives the assistance. This is due to the fact it covers the largest area of any distribution region and has by far the smallest number of customers.
How does the AAHEDC work?
In areas like the north of Scotland, it costs more to deliver electricity (longer cables, tougher terrain, fewer customers to share the cost). To prevent bills from being unfairly high in these areas, all electricity users in the UK contribute a small amount via their electricity bills. The money that’s collected is used to reduce distribution charges specifically for customers in North Scotland.
How much of your energy bill does the AAHEDC account for?
Every user on the network pays for this charge, yet it equates to just 0.3% of a standard bill’s total in 2025, making it the second smallest third-party cost. It’s a flat rate tariff and the base rate doesn’t vary by demand zone.
How are AAHEDC costs recovered?
AAHEDC costs are recovered through a UK-wide levy on all electricity suppliers, which they ultimately pass on to end users via their electricity bills.
Each year, the National Electricity System Operator (NESO) estimates how much support is needed to reduce distribution charges in the north of Scotland. Ofgem calculates and publishes a per-kWh charge, based on the total cost divided across the UK’s total forecast electricity demand.
Electricity suppliers are then charged based on the volume of electricity they supply to end customers, and the suppliers pass on these charges to their customers.
Will you know about the AAHEDC costs in advance?
No, the total charge isn’t clear in advance. The draft tariff published at the end of March each year provides a forecast rate for the following April-March charging year. However, the final tariff isn’t known until July each year, after reconciliation is complete for the previous 12 months.
This means the charge isn’t known for the first three and a half months of the year, but is known ahead of being charged for the remainder of the year.
What drives the AAHEDC charge?
The AAHEDC charge depends on:
- The recovery amount
- Total demand
- Inflation
- Any changes to the composition of the scheme
To learn more about the other TPCs in your energy bill, head to our TPCs explained hub using the button below. Or, to understand more about electricity prices, download our latest bi-annual Electricity Prices Explained guide.
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